Worcester Chapter 11 Bankruptcy Lawyer
What Is Chapter 11 Bankruptcy?
Filing for Chapter 11 bankruptcy is generally an action taken by a business that has too much financial obligation or debt. Anyone, including individuals and couples, can actually file for bankruptcy under this Chapter, but the most common scenario involves corporations, limited liability companies, and partnerships.
Chapter 11 is known as “reorganization” bankruptcy because it is meant to give the company an extended time to restructure its affairs, assets, and debts while still operating. Chapter 11 allows your company to keep its assets. If you believe it is in your best interests to file for Chapter 11, you will need the guidance and service of a reliable Chapter 11 lawyer like Attorney Troy Morrison.
As a Worcester Chapter 11 bankruptcy attorney, I have successfully handled thousands of cases for clients throughout the state. Because I have primarily focused my practice on bankruptcy, I have the advantage of 20+ years of experience.
How Chapter 11 Bankruptcy Works
Chapter 11 is the most expensive, complicated, and often the lengthiest of all forms of bankruptcy. The duration of the action may take years. The court may appoint a bankruptcy trustee, but that is not usually done except in cases of gross mismanagement or fraud.
After filing, an automatic stay is implemented which prohibits creditors from demanding payment. The business generally keeps running while it is given the first opportunity to create a reorganization plan within a given time period.
What Does a Chapter 11 Bankruptcy Plan Consist Of?
The plan must demonstrate how the company will pay back its creditors during the time frame of the proceedings. Generally, Chapter 11 plans have a three- to five-year period in which creditors are paid. These plans are a vital key to the entire process; they must be feasible.
Plans are then submitted to the court and must be accepted by both the court and relevant creditors for approval. If the company cannot come up with an acceptable plan, the creditors may submit a proposed plan to the court.
Creditors can include:
- Those whose credit has been backed by collateral
- Unsecured creditors (lacking collateral)
- Equity security holders, such as shareholders or a partner
How Long Does Chapter 11 Take?
Because no Chapter 11 bankruptcy case is the same, there is no set limit for how long it can take. Some cases may be complete within a few months, but typically it takes 6 months to 2 years for a Chapter 11 case to come to a close. If the case is large and complex, it may last for 5 years or more, depending on the litigation involved and the terms of the Plan of Reorganization. When compared to other options for bankruptcy, this one may turn out to be costly because in some cases, operations are simply prolonged.
Below are some factors that may impact the timing in a Chapter 11 bankruptcy:
- Claims reconciliation
- Creditor prioritization
- Debtor’s Plan of Reorganization
- Court Confirmation on the Plan of Reorganization
- Claims Resolution
Phases of Chapter 11 Bankruptcy
When filing bankruptcy via Chapter 11, it may be broken down into two phases: pre-confirmation and post-confirmation. What separates the two phases is when the bankruptcy court approves the Plan of Reorganization.
During the pre-confirmation phase, court proceedings and litigation occurs, which leads to the formation and approval of the Plan of Reorganization. In the post-confirmation phase, you (the Debtor) must implement the restructuring plan and resolve claims with Creditors before completing Chapter 11 bankruptcy.
Chapter 11 Deadlines and Subchapter V
Note that if you are filing for Chapter 11, you have four months after the filing date to propose a Plan of Reorganization, and the deadline may be extended for up to 18 months. However, in 2019, an exception to the extension rule was made for small businesses via the Subchapter V of Chapter 11. It expedites Chapter 11 bankruptcy via shorter deadlines and allows for flexibility when negotiating the Plan of Reorganization with creditors.
When Chapter 11 is finally over, unfortunately, it will remain on your credit report for seven years. This may turn out to be a hurdle you’ll need to overcome if you are considering opening a new business in Massachusetts in the future.
Contact an Experienced Worcester Chapter 11 Bankruptcy Lawyer
Due to the complexity and extended timeframe of Chapter 11, it is in your best interest to retain a skilled and accomplished attorney.
I will work vigorously to meet your debt relief objectives so that your business can move forward into the future with a fresh start.
"Attorney Morrison's court petition and legal actions were wise, punctual, and all-out, along with his readiness to respond to my concerns."Helga K.
"Troy Morrison made this process very easy and extremely fast"Margarita C
Knowledgeable, helpful, and always quick to respond!Brittany Guntor